I play poker and trade options, seeking edges from study, reflection and analytics.

#018 TWLO Calls Expired

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Trade Details: Expired 3 Jan 21st Twilio Ord Shs Class A (NYSE:TWLO) 30 calls for $0.00 (in at $2.50 for 39 days), $0.00 total proceeds. The stock closed on Friday at $28.38.

Return: (100%)

Note: This was the final act of my 3-to-7 challenge. Back to the drawing board. I had been chasing a rebound in TWLO (i.e. over-trading), then opened this position as the stock broke out of a small symmetrical triangle at the end of an intermediate down-trend (see chart below).

I went out to January expiration recognizing that I'd been compressing my average duration (or days to go until expiration) and increasing risk.

 Trade entered on symmetrical triangle breakout, around point D above.

Trade entered on symmetrical triangle breakout, around point D above.

Similar to other trades in this downswing, I was early and saw downward volatility consume a chunk of my capital before the stock made a dramatic move higher. A week before this trade, I lost my grandmother. When the stock moved in my favor, I was traveling and disconnected from trading - I'd pretty much "mailed it in."

On my last travel day, TWLO moved quickly higher, and I received the Recognia alert below.

 Recognia "continuation wedge" alert for TWLO with a $48 - $52 price target.

Recognia "continuation wedge" alert for TWLO with a $48 - $52 price target.

Rather than sell and capture the available profit, and maintain the minimum balance that optionshouse requires for real-time data (what a ridiculous reason to stay in or close a trade), I held thinking the stock might continue toward the $48 - $52 price target - fallacy: I was in a trade that could turn around my quarter and get me back on track with respect to recent account highs and trading goals. Actually, my account balance was above my Q2 balance goal for several days during this trade.

But, I didn't take the profit. The stock quickly reversed by 20%, crushing the option's value. My account fell back below $1,000 (the aforementioned threshold for real-time data), and I held, overestimating the time left in the contracts.

When TWLO bounced on January 10th, it offered new hope. But, the stock flattened and I mentally readjusted to a slightly lower value each day thereafter. Approaching expiration, it became "too late to sell," and the remaining premium relative to the stock's upside made it "worth the gamble to hold." The psychology of the trade became, "if I sell now and miss a pop, I'll be sick..."

When I get back to trading, I'll definitely read through the posts categorized "Study." It should be an ongoing exercise. Collectively, they're an invaluable lesson about how to get things going positively, and how they can unravel. I should probably write it up, but I'm not going to do it right now.

Status: End of 3-to-7 challenge. $500 to $5.12 in 180 days, a 99% loss. I'm reflecting on lessons learned and revising my style, strategy and approach for next time.

#019 TSLA Puts

#018 TWLO Calls